Why Does Latin America Underperform?
Author(s): G30 Working Group on Latin America
This paper provides an overview and analysis of why Latin America is failing to converge to the income levels of advanced economies – that is, why it continues to underperform. The problem has worsened recently because of a succession of recent global shocks: the COVID-19 pandemic, the return of inflation, higher interest rates, and slowing growth. To address this issue, the paper highlights several policy steps to take going forward.
The report compares the Latin American region’s performance in a set of indicators to that of a group of extraregional peers of similar level of income per capita. Since the 1970s, economic growth in the peer group has been double that of Latin America. Beyond economic growth, the report also addresses issues such as inequality, citizen discontent, and the rise of populism.
This paper seeks to illuminate the various interlinked factors that may contribute to the continued poor performance among the countries studied. It identifies both the sources of Latin America’s stagnation and the main distortions and constraints hindering economic development and points to potential solutions going forward and ways to overcome ongoing challenges.
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